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Asian Business Research Journal 
Vol. 10, No. 4, 20-25, 2025 
ISSN: 2576-6759 
DOI: 10.55220/25766759.355 
© 2025 by the author; licensee Eastern Centre of Science and Education, USA 

 
 

 

 
Measuring Supply Chain Performance 

 
Ahmad Esoud Alkhawaldeh 
 

 
 

Faculty of Business, Al al-Bayt University, Jordan. 
Email: balama1998@yahoo.com 
 

 
Abstract 

The purpose of this study is to review the theoretical framework in performance measurement 
systems in the context of the supply chain. This study provides a review of the literature related 
to performance evaluation criteria for supply chains: indicators, challenges, and the various 
classifications available for them. Finally, the study results are presented, through which some key 
recommendations are proposed. 

 
Keywords: Challenges, Performance measuring indicators, Performance measuring, Supply chain performance indicators, Supply chain.  

 
1. Introduction 

With the increasing intensity of competition in today's business environment, many organizations have 
increasingly realized that their innovative capabilities in enhancing the performance of their supply chains and 
partners have become an integral part of strategic success and long-term survival. Companies must regularly 
review performance measurement indicators to determine whether procedures and steps are being followed 
satisfactorily, which necessitates focusing on appropriate performance indicators for each business unit. 

The importance of supply chains lies in the fact that they are an integral part of most businesses, whether 
commercial, industrial, or service-oriented. They are essential for the success of companies and achieving 
beneficiary satisfaction, in addition to reducing operational costs and improving the financial situation of the 
organization. 

The problem of the current study lies in the performance of supply chains in business organizations today, 
which now face a complex environment with intense competition and increasing environmental uncertainty. 
Organizations are no longer the basis of competition; rather, competition has expanded to become between supply 
chains. 
 

2. Theoretical Framework 
2.1. The Concept of Supply Chain Performance 

Significant pressures and challenges accompanied globalization and rapid technological developments, and the 
intensity of competition in global markets has expanded from being centered on organizations to being between 
the supply chains of organizations (McCarter & Northcraft, 2007). Supply chains vary according to the industry, 
and we can assess a supply chain based on its performance (Chan, 2003). The concept of supply chains emerged in 
the 1960s (Sosa et al., 2019, 11). Stevens (1989) defined the supply chain as a series of interconnected activities 
related to the planning, coordination, and control of materials, starting from raw materials until they reach the 
customer as a product. The supply chain is defined as all parties involved, directly or indirectly, in achieving 
customer satisfaction. The supply chain includes not only the manufacturing organization and suppliers but also 
transportation organizations, warehouses, retailers, and even the customers themselves (Chopra et al., 2013, 1). 
Today, supply chains have become an important aspect of competitiveness; this has necessitated increased attention 
from business organizations to evaluate and track supply chain performance to prevent failure or weakness in 
achieving their strategic goals (Sosa et al., 2019, 69). With the beginning of the third millennium, interest in supply 
chain practices and the trend towards linking them to performance dimensions has increased (Abu Khashabah, 
2019). Organizations use performance measurement to determine whether tasks or activities have achieved their 
objectives. In short, performance can be described as a measure of the success and failure of all tasks, including 
productivity and profitability (Lee et al., 2022). 

Supply chain performance is defined as the results of the supply chain's ability to meet the desires of the end 
consumer and to efficiently convey consumer desires (Hong et al., 2019). Zhou and Benton (2007) define it as the 
actions taken by the supply chain that extend to fulfilling the demands of the end customer. Because the supply 
chain focuses on managing operations both inside and outside the organization, its performance measurement is 
essential for controlling and ensuring the effectiveness of operations (Olugu & Wong, 2009). To maintain 
continuous oversight from the organization and ensure the integrity and performance level of its supply chains, 
performance measurement is necessary. Many studies, such as Chan (2003), emphasize that performance 
measurement is information or feedback regarding activities related to meeting customer expectations and 

mailto:balama1998@yahoo.com
https://doi.org/10.55220/25766759.355


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achieving strategic objectives. At the same time, it reflects the need for improvement in underperforming processes, 
which will positively impact quality efficiency. 
The researcher believes, based on the above, that evaluating supply chain performance is closely related to 
efficiency and effectiveness, and that it is a necessary and ongoing process to ensure that objectives are met and to 
understand customer needs and desires. Furthermore, evaluation is one of the elements of continuous improvement 
sought by today's business organizations.  
 

2.2. The Importance of Measuring Supply Chain Performance 
Performance measurement systems are an integral part of any organization's operations, and their good 

performance depends on the selection of measurement indicators, which often represent a challenge in many 
organizations. Therefore, assessing the effectiveness and efficiency of the supply chain means linking performance 
indicators to performance goals, such as costs, agility, flexibility, sustainability, reliability, commitment, 
cooperation, and integration (Sosa et al., 2019, 84). Regardless of the organization, whether service-oriented or 
industrial, it needs to evaluate the performance of its supply chains and design its supply chains to support the 
competitive priorities of its services or products, which can only be achieved by ensuring two characteristics of 
those chains: efficiency and responsiveness (Efficient supply chains and responsive supply chains). One of the 
potential reasons for the failure of supply chains is that managers do not understand the nature of the demand for 
their services or products, making it obvious that designing supply chains that cannot meet those demands is 
ineffective (Krajewski & Malhotra, 2022, 537). 

Ahi and Searcy (2015) argue that performance measurement allows organizations to control progress and 
monitor the implementation of their goals, highlight achievements, better understand key processes, anticipate 
potential problems, and identify opportunities and improvement actions. A study by Azim et al. (2015) emphasized 
the importance of performance measurement as a means to sustain organizational control and ensure the 
implementation of the organization's strategies that lead to achieving its overall goals and objectives. This means 
that measuring the performance of supply chains also allows for identifying all existing gaps in the chain, as well as 
determining ways to address them and monitoring the implementation of proposed remedies and recommendations 
until the planned goals are achieved. 
       

2.3. Principles of Measuring Supply Chain Performance 
Many studies have addressed the general principles of performance measurement (Gunasekaran et al., 2001; 

2004; Sillanpää & Kess, 2012; Agami et al., 2012). While Adams et al. (1995) reached a set of necessary 
requirements for measuring performance 

• The metrics should be derived in alignment with the organization's strategy: The ability of the 
performance measurement system to clearly convey the strategy throughout the organization is a critical 
factor in determining business success. 

• Performance metrics should respond to developments in business activities and processes. 

• Performance metrics should be dynamic: the ability to keep pace with changes in strategies, processes, and 
the competitive environment of the organization. 

• The metrics should have a team-based approach: the team must include individuals responsible for the 
activities to be measured. 

The study of Gunasekaran et al. (2001; 2004) emphasized the need for the performance measure to embody 
The essence of organizational performance, and that the performance measurement system facilitates the 
selection of the most appropriate measure, and that the measurement system balances performance between 
financial and non-financial indicators. The study by Quraishi and Bouabdallah (2022) addressed two main 
principles in performance measurement: that the system should be understood by all employees, and that there 
should be incentives for good performance. Al-Kawashi (2015) emphasized the necessity for performance 
indicators to be accurate, truthful, easy to understand, measure, and represent, and available at a reasonable 
cost. The study by Akyuz and Erkan (2010) pointed out important requirements for a supply chain performance 
measurement system, most notably that it should be capable of accurately measuring partnership, collaboration, 
agility, flexibility, information, and productivity at a lower cost, be valid and reliable, simple and easy to use, 
and linked to strategic, tactical, and operational levels for decision-making. 
 

2.4. Difficulties In Measuring Supply Chain Performance 
The study by Lee and Billington (1992) concluded that measuring supply chain performance is difficult and 

that there is no perfect metric. While the issue of evaluating and assessing performance may seem simple 
theoretically, it is actually quite complex in practice, due to the numerous evaluation indicators adopted by 
organizations (Al-Kawashi, 2015), as well as the various stakeholders involved (shareholders, workers, 
customers, suppliers, etc.) (Beamon, 1998). One of the greatest difficulties is choosing the appropriate method 
for supply chain performance for two reasons: one is that flaws in evaluation will lead to high costs, and the 
other is that many performance indicators in measuring supply chains are qualitative rather than quantitative, 
such as quality, flexibility, and satisfaction levels, which are subject to judgment and personal opinion, thus 
affecting the assessment of supply chain performance (Chan, 2003). 

The study conducted by Gunasekaran et al. (2004) mentioned that SCM plays a significant role in gaining a 
competitive advantage to enhance organizational productivity and profitability; therefore, it is essential to have 
an effective performance measurement. The study confirmed that currently, many organizations continually 
neglect continuous improvement in the supply chain. One reason for the poor performance of organizations' 
supply chains is primarily due to the failure to identify metrics and performance indicators for supply chains, 
which is a challenge in itself due to its importance and the resulting negative or positive outcomes. On his part, 
Ambe (2014) summarized, as shown in table 1, a set of difficulties in identifying performance indicators for 
supply chains. 

 



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Table 1. Difficulty in Defining and Collating What Supply Chain Indicators Are 

Difficulty Description of Difficulty 

View of SCM 
• Performance measurements had not viewed supply chain as a whole entity 
• It is difficult to evaluate performance with multiple inputs and outputs to a system 

 
Focus of 
Measures 

• Organisation focuses on traditional financial measures despite the need to provide a 
balanced approach to performance measurement 
• Too much reliance on the use of costs as a primary indicator 

Complexities in 
Categorisation 

• Complexity of supply chain metrics 

• Disagreement over an appropriate categorisation 

 
Lack of a 
Balanced 
Approach 

• Lack of a balanced approach to integrate financial and non-financial measures 

• Lack of a system thinking 

• Absence of an approach for developing and designing supply chain performance 
measures 

Orientation 
• Measures tend to be historically oriented and not focused on providing a forward- 
looking perspective 

 
Strategic Nature 
and Alignment 

• Measures do not relate to important strategic, non-financial performance, like 
customer service/loyalty and product quality 

• Measures do not directly link to operational effectiveness and efficiency 

 
Some difficulties arise in performance measurement due to complexities, some of which are technical (the 

difficulty of understanding and controlling dynamic characteristics, and the multiple contextual forms of 
performance) and others are social (the difficulty of reaching a consensus on the concept of performance, its 
dimensions, and its measurement) (Quraishi and Bouabdallah, 2022). In the same context, Panayides et al. 
(2018) see that the greatest challenge in measuring logistics performance is in areas where goods are at risk or 
where there is a high level of uncertainty. 

The researcher believes that despite the difficulties faced in the performance measurement of supply chains, 
this does not diminish the importance of performance measurement as both an evaluative and improvement tool, 
in line with the famous saying, "What cannot be measured cannot be improved." Organizations should adopt 
both financial and non-financial performance indicators to clearly and accurately reflect overall performance. 
Furthermore, the success of the performance measurement task depends on the accuracy and appropriateness of 
the selected indicators, as well as their measurability and calculability to achieve the desired purpose. 
 

2.5. Supply Chain Performance Metrics 
It is evident in theoretical literature that performance measurement standards evolve in both scope and 

significance. For example, there is a shift in focus from traditional cost accounting methods to techniques that 
consider the cost of activities and their impact on other functions such as customer service, asset utilization, 
productivity, and quality, in order to emphasize the overall performance of the supply chain (Gunasekaran et al., 
2001). Traditionally, performance metrics were based on price differences, rejected materials upon receipt, and 
on-time delivery, and they remained for many years. The selection and trade-off process was primarily based on 
price competition, with less attention paid to other standards such as quality and reliability. Recently, the 
approach to evaluation and performance measurement has undergone a radical change (Gunasekaran et al., 
2004). 

Performance metrics for supply chains have evolved in two phases: the first phase, which is temporally 
linked to the period before the 1980s, focused on financial indicators such as profitability and return on 
investment. These quantitative measures were insufficient to assess supply chain performance, as they 
overlooked non-financial (intangible) aspects such as customer satisfaction, the time value of time, and 
opportunity costs (Sosa et al., 2019, 73; Tan, 2002). The second phase began in the late 1980s as a result of 
changes in the global market. This phase focused on intangible metrics dominated by a strategic approach, 
coinciding with the emergence of new management concepts such as Total Quality Management (TQM), 
Supply Chain Management (SCM), Just-In-Time (JIT) production, Flexible Manufacturing Systems (FMS), and 
Optimal Production Technology (OPT) (Ghalayini & Noble, 1996). 

Researchers have differing views on the dimensions of measuring supply chain performance. Some 
categorize them into qualitative indicators (quality, flexibility, visibility) and quantitative indicators (innovation, 
costs, resource utilization) (Beamon, 1998; Chan, 2003). Some studies have adopted measuring supply chain 
performance through efficiency and effectiveness (Adaileh et al., 2022; Abu Nimeh et al., 2018; Abdallah et al., 
2014), while others classified them into financial metrics (productivity and production costs) and non-financial 
metrics (quality, flexibility, time) (Toni & Tonchia, 2001). The study by Abdallah et al. (2021) adopted eight 
dimensions for performance measurement: quality, cost, flexibility, shipping, responsiveness, lead time, and 
market access. The study by Abu Difallah and Al-Sha’ar (2017) used four dimensions to measure supply chain 
performance, represented by responsiveness and collaboration, economic cost, consumer satisfaction, and 
supplier relationships. 

Later, models for measuring supply chain performance emerged, such as the Supply Chain Operations 
Reference (SCOR) model, the Balanced Scorecard model, and the Analytic Hierarchy Process (AHP) model 
(Saleheen et al., 2018). Reddy et al. (2019) found in their critical study of the literature on performance 
measurement, which covered more than 450 studies focused on measuring supply chain performance from 1998 
to 2018, that the most widely used performance measurement model was the Balanced Scorecard (BSC), which 
constituted 35% of the studies, followed by the Supply Chain Operations Reference model (SCOR), as shown in 
Figure 1. 
 



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Figure 1. Classification of researchers according to supply chain performance metrics. 

 
The study by Gunasekaran et al. (2001) proposed indicators for measuring supply chain performance 

according to strategic, tactical, and operational levels. Meanwhile, the study by Le (2020) addressed two 
dimensions for measuring supply chain performance: financial efficiency and environmental efficiency. Customer 
satisfaction is of utmost importance in modern supply chains, and good service must be provided to any 
customer. A supply chain strategy cannot be considered effective without a satisfied customer. This emphasizes 
that supply chain performance measures should be based on customer satisfaction (Gunasekaran et al., 2001). As 
is well known, there is no perfect measure for supply chain performance (Lee & Billington, 1992).  

The study by Gunasekaran and Kobu (2007) identified nearly 90 indicators for measuring supply chain 
performance. This is clearly demonstrated through the review of numerous studies that adopted various 
measures, which have evolved and diversified over the past decades, focusing initially on financial and 
quantitative measures, and later adopting non-financial and qualitative measures. The most important of these 
metrics are: 
First: Efficiency and Effectiveness Measure 

Despite the diversity and variety of writings that have addressed performance measurement, the 
performance concept presented by Anthony (1965) with its two dimensions of efficiency and effectiveness is the 
most widely circulated and accepted (Qureshi and Abdullah, 2022). The concept of supply chain performance 
refers to the level of efficiency and effectiveness in achieving tasks related to supply chain objectives (Mentzer & 
Konrad, 1991; Neely, 2007, 135), where effectiveness refers to the extent to which planned goals are achieved, 
while efficiency pertains to how resources are utilized (Lai et al., 2002). 
Second: Balanced Scorecard (BSC) 

This model was developed in 1996 by Kaplan and Norton as a tool for measuring organizational 
performance in both financial and non-financial aspects. The scorecard translates the organization's vision and 
strategies into objectives and includes four perspectives: financial perspective, customer perspective, internal 
processes perspective, and learning and growth perspective (Kaplan and Norton, 1996). The Balanced Scorecard 
has gained acceptance as a measurement tool and has extended to the evaluation of supply chain performance, 
with an increase in scholarly papers on this explicitly in recent years (Sousa et al., 2020). 
Third: Supply Chain Operations Reference Model (SCOR) 

This model is considered a benchmark for evaluating and improving supply chain management at the 
organizational level. It was introduced in 1996 by the Supply Chain Council (SCC) and includes five dimensions: 
reliability, responsiveness, flexibility, cost, and asset management. This model provides a standardized 
framework for analyzing, designing, and improving supply chains. It consists of a set of key processes that 
include: plann, source, make, deliver, and return (Manay et al., 2022; Santoso & Heryanto, 2022; Wong & 
Wong, 2008). Recently, some studies have added two new dimensions to the model: Information Systems and 
Digital Technology in response to globalization (Ayyildiz & Gumus, 2021). 
Fourth: Analytic Hierarchy Process (AHP) 

It is one of the multi-criteria decision models developed by Saaty in 1970 and is classified among the 
quantitative mathematical indicators used when measuring supply chain performance. The AHP method is 
based on multi-criteria analytical comparisons and helps managers make appropriate decisions regarding the 
monitoring and analysis of supply chain performance results, thereby improving future performance. Especially 
since performance measurement processes in the twenty-first century rely on forecasting and making future 
estimates to measure performance (Al-Danaf, 2022; Aqasim & Laraj, 2015). 
Fifth: According to the levels 

Gunasekaran et al. (2001) presented a review in the theoretical literature on supply chain performance 
measures, proposing performance dimensions at three levels: the strategic level, the tactical level, and the 
operational level, with each level having financial metrics and non-financial metrics. 
Some have classified them into quantitative and qualitative measures, financial and non-financial, and according 
to competitive priorities such as quality, cost, delivery, flexibility, and others. 
 

3. Conclusions  
The researchers in the literature on supply chain performance identified several challenges related to the 

assessment and evaluation of supply chain performance. They considered the evaluation of supply chain 
performance to be particularly difficult due to the inclusion of many components such as suppliers, manufacturers, 
wholesalers, retailers, and customers. Additionally, the researchers noted that evaluating supply chain performance 



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is one of the critical issues, especially with the difficulty of maintaining customer satisfaction due to competition 
and rapid changes in markets and business environments. 

There is no agreement on a unified definition of performance metrics, as there is a discrepancy among 
researchers and thinkers regarding the indicators and criteria that can be used to measurement the performance of 
supply chain. 

The researcher sees, after this extensive induction on supply chain performance measures, that there is no 
comprehensive, complete measure and that performance measures are diverse and multiple, with no single measure 
capable of addressing all aspects related to performance. It is necessary that when choosing a performance measure, 
it should fit the nature of the organization's work, whether it is service-oriented or production-oriented. 
 

4. Recommendations  
Based on the results obtained, the following recommendations can be made: 

• The necessity of using non-financial indicators alongside financial indicators, and linking them together in a 
comprehensive and integrated system to evaluate the performance of supply chain management; 

• The necessity of publishing supply chain management reports and evaluating their performance through 
public seminars and conferences, while urging universities to teach a course titled Supply Chain 
Management, and addressing indicators, systems, and models for evaluating the performance of modern 
supply chain management; 

• Focusing on the alignment of performance evaluation indicators for supply chain management with the 
activities and specificities of the supply chain and the organization in general. 

 

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